Principles of Financial Accounting

Quiz # 2

Instruction:
1 Please ensure that you state your section, full name, and student ID in the yellow space pr

2 Please answer all the questions by recording your responses in the yellow highlighted area

3 If you need to do rough work, please use the ROUGH WORK area provided. DO NOT type

4 Please ensure that you name the excel file after your Name and Student ID. Not following

5 Upload the solution on LMS Assignments Tab by the allocated deadline.

6 Solution received after the deadline will be accepted with a 10% mark reduction, even if

Section
Name
ID
udent ID in the yellow space provided below.

s in the yellow highlighted areas.

area provided. DO NOT type anywhere on the sheet except for in the rough work area provided.

and Student ID. Not following this instruction will result in receiving -1.

ated deadline.

10% mark reduction, even if it is late by 1 minute. No responses will be accepted 15 minutes past the deadline.
the deadline.
BrightStar Academy runs an institute for tuition services. The Academy also provides home tuition services. It is the
basis. BrightStar Academy's fiscal year end is December 31, 2019. The unadjusted trial balance dated December 31, 20
November 30, 2019, but not for December).
BrightStar Academy
Unadjusted Trial Balance
31-Dec-19
$ $
Cash 13,430
Accounts Receivable 1,785
Unexpired Insurance 2,720
Prepaid Rent 5,100
Tuition supplies 383
Classroom Equipment 153,000
Accumulated depreciation: Classroom Equipment 61,200
Account Payable 2,975
Notes Payable 4,250
Dividends Payable 850
Interest Payable 21
Income Taxes Payable 2,890
Unearned Tuition Revenue 935
Share Capital Ordinary 17,000
Retained Earnings 48,110
Dividends 850
Tuition Revenue Earned 131,219
Advertising Expense 6,290
Insurance Expense 3,740
Rent Expense 14,025
Tuition Supplies Expense 663
Utilities Expense 4,250
Depreciation Expense: Classroom Equipment 28,050
Salaries Expense 23,375
Interest Expense 21
Income Taxes Expense 11,768

269,450 269,450

Other Information

1.     Accrued but unrecorded tuition revenue earned as of December 31, 2019 is $3,000.
2.     According to the records, $750 of cash receipts originally recorded as unearned tuition had been earned as of Decem
3.     The company purchased a 12 months insurance policy on August 1, 2019 for $4,080.
4.     On October 1, 2019, the company paid $7,650 for rent through March 31, 2020.
5.     Based on a count taken at December 31, tuition supplies on hand amount to $220.
6.     The classroom equipment was acquired when the business was first formed. Its estimated useful life at that time wa
7.     On November 1, 2019 the company borrowed $4,250 by signing a three months 6% note payable. The entire note,
8.     Accrued but unrecorded salaries at December 31 are $2,700.
9.     Estimated income taxes expense for entire year totals $18,000. Taxes are due in the first quarter of 2020.
10. A cash payment of advertising expense for $520 was recorded as a debit to Utilities expense $250 and a credit to C

Instructions:
Where necessary, you may round your answer to the nearest whole number.

a.     Prepare the necessary adjusting/correcting entry for (1) to (10). Omit explanation.
b.     Prepare BrightStar Academy’s adjusted trial balance for December 31, 2019.
c.     Prepare BrightStar Academy’s Income Statement for December 31, 2019.
d.     Prepare BrightStar Academy’s Retained Earnings Statement for December 31, 2019.
e.     Prepare BrightStar Academy’s Statement of Financial Position for December 31, 2019.
f.     Prepare the necessary year-end closing entries for BrightStar Academy.
g.     BrightStar Academy’s unadjusted trial balance reports dividends of $1,000. As of December 31, 2019 have these d
uition services. It is the policy of the Academy to record adjusting entries on a monthly
e dated December 31, 2019 is given below (this reflects the adjusting entries up until

been earned as of December 31.

useful life at that time was five years (or 60 months).
ayable. The entire note, plus three months accrued interest is due on February 1, 2020.

arter of 2020.
e $250 and a credit to Cash $250.

er 31, 2019 have these dividends been paid? Briefly explain.

Marks
20 (a) Journalize
Negative adjusting
marking: entries
Overall 2 marks will be deducted if incorrect account titles are
used.

General Journal
Date Account Title and Explanation Debit Credit
1 31-Dec Accounts Receivable 3,000
1 Tuition Revenue Earned 3,000

1 31-Dec Unearned Tuition Revenue 750

1 Tuition Revenue Earned 750

1 31-Dec Insurance Expense 340

1 Unexpired Insurance 340

1 31-Dec Rent Expense 1,275

1 Prepaid Rent 1,275

1 31-Dec Tuition Supplies Expense 163

1 Tuition supplies 163

1 31-Dec Depreciation Expense: Classroom Equipment 2,550

1 Accumulated depreciation: Classroom Equipment 2,550

1 31-Dec Interest Expense 21

1 Interest Payable 21

1 31-Dec Salaries Expense 2,700

1 Salaries Payable 2,700

1 31-Dec Income Taxes Expense 6,232

1 Income Taxes Payable 6,232

1 31-Dec Advertising Expense 520

0.5 Utilities Expense 250
0.5 Cash 270

5 (c) Prepare Income Statement

BrightStar Academy
Income Statement
31-Dec-19
 Revenue:
0.5 Tuition Revenue Earned 134,969

Less: Expenses
0.5 Advertising Expense 6,810
0.5 Insurance Expense 4,080
0.5 Rent Expense 15,300
0.5 Tuition Supplies Expense 826
0.5 Utilities Expense 4,000
0.5 Depreciation Expense: Classroom Equipment 30,600
0.5 Salaries Expense 26,075
0.5 Interest Expense 42
0.5 Income Taxes Expense 18,000

105,733
Net Income 29,236

2 (d) Prepare Statement of Retained Earnings

BrightStar Academy
Retained Earnings Statement
31-Dec-19
0.5 Opening Retained Earnings, Dec 1 48,110
0.5 Add: Net income 29,236
0.5 Less: Dividends (850)

0.5 Retained Earnings, Dec 31 $ 76,496

8 (f) Journalize
Negative closing
marking: entries1 mark will be deducted if incorrect account titles are
Overall
used.
General Journal
Date Account Title and Explanation Debit Credit
0.5 31-Dec Tuition Revenue Earned 134,969
0.5 Income Summary 134,969

0.5 31-Dec Income Summary 105,733

0.5 Advertising Expense 6,810
0.5 Insurance Expense 4,080
0.5 Rent Expense 15,300
0.5 Tuition Supplies Expense 826
0.5 Utilities Expense 4,000
0.5 Depreciation Expense: Classroom Equipment 30,600
0.5 Salaries Expense 26,075
0.5 Interest Expense 42
0.5 Income Taxes Expense 18,000

0.5 31-Dec Income Summary 29,236

0.5 Retained Earnings 29,236

0.5 31-Dec Retained Earnings 850

0.5 Dividends 850

EN
Marks
14 (b) Prepare adjusted trial balance

BrightStar Academy
Adjusted Trial Balance
31-Dec-19
Debit Credit
0.5 Cash 13,160
0.5 Accounts Receivable 4,785
0.5 Unexpired Insurance 2,380
0.5 Prepaid Rent 3,825
0.5 Tuition supplies 220
0.5 Classroom Equipment 153,000
0.5 Accumulated depreciation: Classroom Equipment 63,750
0.5 Account Payable 2,975
0.5 Notes Payable 4,250
0.5 Dividends Payable 850
0.5 Interest Payable 42
0.5 Income Taxes Payable 9,122
0.5 Salaries Payable 2,700
0.5 Unearned Tuition Revenue 185
0.5 Share Capital Ordinary 17,000
0.5 Retained Earnings 48,110
0.5 Dividends 850
0.5 Tuition Revenue Earned 134,969
0.5 Advertising Expense 6,810
0.5 Insurance Expense 4,080
0.5 Rent Expense 15,300
0.5 Tuition Supplies Expense 826
0.5 Utilities Expense 4,000
0.5 Depreciation Expense: Classroom Equipment 30,600
0.5 Salaries Expense 26,075
0.5 Interest Expense 42
0.5 Income Taxes Expense 18,000

0.5 283,953 283,953

10 (e) Prepare Statement of Financial Position

Negative marking: -1 mark if current assets not in correct order, -1 mark if

current liabilities not in correct order.
BrightStar Academy
Statement of Financial Position
31-Dec-19
 ASSETS
Property, plant and equipment
0.5 Classroom Equipment 153,000
0.5 Less: Accu. depreciation: Classroom Equipment 63,750 89,250

Current Assets
0.5 Unexpired Insurance 2,380
0.5 Prepaid Rent 3,825
0.5 Tuition supplies 220

0.5 Accounts Receivable 4,785

0.5 Cash 13,160
0.5 Total Current Assets 24,370

0.5 Total Assets $ 113,620

Equities and Liabilities

Equity
0.5 Share Capital - Ordinary 17,000
0.5 Retained Earnings 76,496 93,496

Non Current Liabilities

Current Liabilities
0.5 Notes Payable 4,250
0.5 Account Payable 2,975
0.5 Income Taxes Payable 9,122
0.5 Salaries Payable 2,700
0.5 Dividends Payable 850
0.5 Unearned Tuition Revenue 185
0.5 Interest Payable 42
0.5 Total Current Liabilities 20,124

0.5 Total Equities and Liabilities $ 113,620

1 (g) Briefly explain if dividends are paid.

The presence of account Dividends Payable on the Trial Balance indicates that the
dividends are yet to be paid because the related liability/payable exists.

END OF QUIZ
Rough Work

Rough Work